The modestly stronger-than-expected February
triggered a nearly 2-point gain in the long Treasury bond as traders noted strong growth in service-sector and construction employment, and continued weakness in manufacturing.
Nonfarm payrolls swelled by 275,000 for the month, beating the 245,000-job gain expected among economists surveyed by
. The payrolls number is volatile, so exceeding the median forecast by 30,000 does not make for a strong upside surprise. Further supporting the bond market, the January payroll gain was revised down to 217,000 from 245,000. The 12-month average of payroll gains rose to 232,000 from 225,000.
Service-sector payrolls added 263,000 jobs, their largest increase since July. And construction payrolls hopped by 72,000. But manufacturing payrolls contracted again, losing 50,000 jobs. Recent rebounds in key manufacturing indicators -- especially the
Purchasing Managers Index
, which in February signaled growth for the first time in nine months -- had led some economists to believe that manufacturing payrolls would reverse their decline.
But if the payrolls number indicates that the economy is continuing to grow at an impressive pace, other components of the employment report quelled fears that higher inflation is around the corner. The unemployment rate ticked up from the 29-year low of 4.3% to 4.4%.
Even more importantly, the report shows that wage growth is under control.
Average hourly earnings
rose by just 0.1%, the smallest increase since February 1996. The year-on-year rate of average hourly earnings growth dropped to 3.6%, the lowest rate since July 1997, from 3.9%.
The fourth major component of the jobs report, the average workweek, lengthened to 34.7 to 34.5, but the increase was outside of manufacturing, where the workweek remained at 41.6 hours and overtime dropped to 4.5 hours from 4.6.